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Microeconomics > EXAM MASTERLIST > Flashcards

EXAM MASTERLIST Flashcards

1
Q

The average total cost curve will be downward sloping when

A

MC < ATC

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2
Q

Economic cost is what

A

the value of all resources used to produce a good

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3
Q

What is price elasticity of demand?

A

Its how sensitive buyers are to a change in price

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4
Q

Why is average total cost important to a business?

A

It tells a firm what the profit per unit produced is

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5
Q

When is total utility maximized?

A

When marginal utility is neither positive nor negative

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6
Q

Additional pleasure from a good decreases as more of it is consumed, this is _________

A

The Law of Diminishing Marginal Utility

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7
Q

Changes in short-run total costs result in changes in….

A

Variable costs

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8
Q

If the demand for a product is elastic, then _______________

A

% change in quantity demanded is greater than the % change in price

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9
Q

What occurs when the marginal cost curve rises?

A

Total costs will rise, when MC is positive

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10
Q

In the short run, when a firm produces zero output, total cost equals

A

Fixed Costs

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11
Q

What does a production function show?

A

The max amounts of output that can be produced from different combinations of factor inputs

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12
Q

If two goods are complementary

A

Cross-price elasticity will be negative

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13
Q

Price elasticity of demand formula…

A

% change in quantity demanded / % change in price

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14
Q

The law of diminishing returns is reflected in

A

the shape of the marginal cost curve

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15
Q

Cross-price elasticity

A

How consumers react to a change in a goods price

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16
Q

Marginal Utility

A

The additional satisfaction received from consuming an additional unit of a good

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17
Q

When the average total cost curve rises, the marginal cost curve will …

A

be above the average total cost curve

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18
Q

What is likely to have a price elasticity coefficent > 1

A

Long term air travel

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19
Q

Normal Good

A

Demand for a normal good rises when income rises

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20
Q

Consumer Surplus Formula

A

Amount willing to pay - actual price

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21
Q

If two goods substitute eachother

A

Then the quantity demanded for good x will fall with a reduction in price of good y

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22
Q

The most desirable rate of output for a firm is the output that

A

Maximizes total profit

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23
Q

Fixed Cost + Variable Cost =

A

Total Cost

24
Q

When a firm increases variable input w/o changing its fixed input….

A

the firm will experience diminishing returns

25
Q

Why does price discrimination work for airports?

A

Buyers do not have information about the true price

26
Q

ATC =

A

Total Cost / Amount produced

27
Q

What is a inferior good?

A

A good that experiences decreased sales when incomes increase

28
Q

What happens when MPP falls?

A

MC of each output rises

29
Q

If the sign on the income elasticity formula is positive then

A

the good is normal

30
Q

The MCC curve intersects with what other curves?

A

ATC and AVC

31
Q

Total Utility

A

How much marginal utility a good has given an individual

32
Q

When the price elasticity has an absolute value

A

the quantity demanded will decrease by that amount for every 1% decrease in price

33
Q

A good is inferior when

A

its income elasticity of demand is negative

34
Q

Accounting cost

A

Labor + Equipment + Materials

35
Q

Profit per unit is maximized when

A

ATC is minimized

36
Q

Barrier to entry

A

Obstacles that make it hard for firms to enter a market

37
Q

When will a production shut down?

A

When price is below AVC

38
Q

The demand curve confronting a competitive firm is

A

Horizontal, while market demand is downward-sloping

39
Q

Marginal Revenue is always ________ for a competitive firm

A

Constant

40
Q

Improvements to technology causes ATC to ___________

A

shift down

41
Q

Perfect Competition

A

many firms with no market power

42
Q

If a new firm opens

A

the market supply curve will shift to the right

43
Q

A perfectly competitive firm is a price taker because

A

prices are determined by several buyers and sellers

44
Q

Profit per unit

A

Price - ATC

45
Q

A monopoly realizes larger profits than a comparable competitive market by

A

Reducing production and pushing prices up

46
Q

A monopolist will find that its marginal revenue curve

A

Lies below its demand curve and is steeper than its demand curve.

47
Q

A firm maximizes profit when

A

Total revenue exceeds total cost by the greatest amount.

48
Q

What is normal profit

A

profits covering all explicit costs and implicit costs

49
Q

When technology improves, the firm’s marginal cost curve shifts

A

Downward, and supply increases.

50
Q

A firm’s total revenue can be determined by

A

Price times quantity.

51
Q

Which of the following does not affect marginal costs?

A

An increase in property taxes.

52
Q

If a perfectly competitive firm is producing a rate of output at which MC exceeds price, then the firm

A

Can increase its profit by decreasing output.

53
Q

When a perfectly competitive firm should expand output?

A

P> MC

54
Q

Monopolists set prices

A

At the output where marginal revenue equals marginal cost.

55
Q

A patent gives a firm the exclusive right to produce a product for

A

20 years

56
Q

Short-run profits are maximized at the rate of output where

A

Marginal revenue is equal to marginal cost.

57
Q

A monopolist has market power because it

A

Faces a downward-sloping demand curve for its own output.

Microeconomics (6 decks)

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